Oil market recap: week ending 1 February 2015

PIRA Energy Group has said that low oil prices and cheap money will lead to stronger global economic growth and much stronger oil demand. In the US, stock surplus has once again widened. In Japan, Crude runs rose slightly and crude imports rose to produce a crude stock build.

Worldwide

Low oil prices and cheap money will lead to stronger global economic growth and much stronger oil demand than conventional wisdom would suggest.

For the next six months, oil supply will continue to overwhelm demand.

The above is partly due to rapid growth in Iraqi production as its government seeks more revenue.

Wide contango will further widen as crude oil stocks in the three major OECD markets fill to the brim and floating stocks keep on increasing.

USA

US commercial oil inventories are now at 125 million bbls.

Crude stocks increased strongly while products drew.

So far in January, the overall inventory increase has been the largest since 2009.

Despite a colder than usual January, the northeast of the US is not seeing much in the way of substitution of oil for natural gas.